Server Planet operates a web hosting company. Examine the following items and prepare the

Server Planet operates a web hosting company. Examine the following items and prepare the

Nov 17th, 2015

FratBro23

Category:

Accounting

Price: $5 USD

Question description

The
beginning of year accounts payable was $100,000. Purchases on trade accounts during the year
were $650,000, and payments on account were $610,000.

The
company incurs substantial costs for electricity to run its servers and air
conditioning systems. As of December
31, 20X7, it is estimated that $55,000 of electricity has been used, although
the monthly billing for December has not yet been received.

Server
Planet sells web hosting plans for as low as $25 per month. However, it requires its customers to
prepay in 6-month increments. As of
the end of the year, $375,000 had been coll

Web
hosting services are subject to sales taxes, and Server Planet collected
$65,000 during the year. All of these
amounts have been remitted to taxing authorities, with the exception of
$5,000 that is due to be paid in January, 20X8.

ected for 20X8 web hosting plans.

The
company has total bank loans of $1,500,000.
This debt bears interest at 6%, payable monthly. As of December 31, 20X7, all interest

The
company's bank loans ($1,500,000) are all due on June 30, 20X8. However, Server Planet has a firm lending
agreement with the bank to renew and extend $1,000,000 of this amount on a
5-year basis. The company intends to
exercise this renewal option, but is not yet sure about the final disposition
of the remainder.

had
been paid, with the exception of accrued interest for the last half of
December.